>> we'll see you at 5:00 on "fast money." got netflix earnings. a fake-out as i'll call it. wal-mart dragging everybody down. ten stocks are actually higher. we're going to leave you with some good news. thanks for watching. "the closing bell" starts now. >> welcome to "the closing bell", everybody. i'm kelly evans. >> i'm bill griffeth. it is a jungle out there. how cool is this? cool and the gang will be joining us here at the new york stock exchange. they are ringing the closing bell today, celebrating their 50th anniversary together.excha. they are ringing the closing bell today, celebrating their 50th anniversary together. and kool himself will be with us to ring the bell. >> first, we have a ton of market news to bring you. let's start with wal-mart. it is dragging down the dow right now. the entire brick-and-mortar retail space, the retailers

today after forecasting a 6% to 12% drop in earnings in fiscal 2017. the question is how much of a warning sign is it for other retailers and what is it telling us about the economy? >> that's not the only story today. it's not just about equities. take a look at the ten-year yield. the beige book came out an hour ago and the markets really didn't like it in terms of the growth stories, so we're back below 2% on the ten-year. the dollar index is now at a seven-week low. the euro has moved to a seven-week high against the dollar itself. gold is now back above its 200-day moving average for the first time since may with an almost 2% move higher today. >> one of the country's largest mortgage lenders wells fargo reporting its results. we're going to get the cfo's take on the housing market. john strewsberry coming up. netflix will be reporting earnings after the bell tonight.

we'll tell you the number to watch for in that release, coming up later on "closing bell." >> courtney reagan, what more have we learned? >> wal-mart told analysts it's lowering its sales guidance flat due to currency impacts for 2017. the investments in wages, e-commerce, supply chain, they really kick up. earnings per share between 6% and 12% in the year prior. what's surprising is the clarification that it will account for 75% of the eps reduction in fiscal 2017. ceo doug mcmillan giving somewhat of a mea culpa for confusion. take a listen. >> many might not have done the math or understood how to do the math. may we didn't give you information to do the math, but together with the starting wage

rate changes to nine and ten and the other investments that we called out, it was clear that was a big number. >> flat from 2017. by 2019, earnings will again be at current levels. charles holly expects wal-mart will see sales grow over the next three years while generating $80 billion in cash. and buying back $20 billion in stock. there was a lot there to digest. pretty surprising to say the least. >> did catch the market by surprise. for more, paul trussel. you've got the wage pressure, the dollar pressure, pressure from online trade. is this something that we should -- that you are wringing your hands over, or just the cost of doing business? >> it's very much the cost of doing business. we can't take for granted that this is coming from wal-mart, the biggest brick-and-mortar retailer out there.

i think that all other retailers have to watch what wal-mart does very closely. i don't have the opinion that by wal-mart making these investments in labor, is anything other than catch-up, frankly. i'm not certain that they will be able to translate these investments in price, labor supply, e-commerce, everything that courtney mentioned into actual mean iingful sales gains. >> there seem to be two separate things going on here. one is the wage pressure. you can understand how to evaluate that in one sense. perhaps it's a positive sign for the economy and something all retail has to deal with and that's fine. the other is e-commerce. how realistic is it that everybody with an amazon account today is ultimately going to want to look to order their merchandise down the road from wal-mart.com? >> i agree with you. there are some great retailers out there that have already been making a number of investments

on their own right. amazon obviously is the elephant online. but even in the brick-and-mortar space, whether it's a kroger, whether it's costco or the dollar stores, these guys have already, you know, attracted market share from wal-mart because of their convenience, because of their expanded assortment. and wal-mart really is now trying to fight and get that share back. and so we commend wal-mart on everything that they are announcing their willingness -- >> but even it's down 3% today, which tells you it's not just about a wal-mart specific story. this is now something -- i think i saw cabella's down 3% as well. anybody who's not amazon right now is seeing their shares, concerned about what the future really is. >> we already have experienced all yearlong an environment in which sales have been a little bit lighter than what they would have hoped given the perceived health of the come.

now we're at a point in time where between amazon or wal-mart, you have an inability to expand margins. you can't take prices up. you have to invest in labor. you have to invest in e-commerce. that is why you're seeing the very broad contraction in retail today. >> it's not lost on anybody. kelly a little while ago on twitter showed the crisscross as amazon now exceeds wal-mart in terms of market capitalization. so you are seeing this sort of transition now from brick-and-mortar to online commerce right now. >> you are. but there is a lot to kind of go into that conversation when you compare amazon to wal-mart. remember, investors treat those two very differently. amazon can sort of not make any money, and investors reward it. wal-mart does the same thing. and the stock goes the other way. so there certainly is a shift, but amazon in some sense is still that growth company. wal-mart hasn't been able to

grow like it would. so it's sort of playing that catch-up game like paul has sunlighted. if amazon were to suddenly go the opposite way and build out a network of 3,400 stores, i think they would have a little bit more trouble as well. >> thank you both. meanwhile, the dow is down 164. the ten year below 2%. a lot to get to. ron weiner from rdm financial groups. so is ben willis from princeton securities. the beige book came out at 2:00 eastern and that was the second leg lower. was there something in there that the market really didn't like? sort of beige kind of report. >> exactly. it was a beige report. i think the takeaway was that there's still -- if the fomc cannot get off the schnide and

raise rates, they're not going to get any impetus from the beige book. i think the view of the overall market is that we're once again in nowhere land. we have no direction from leadership at the central bank of the united states of america. and when there's uncertainty, there's sellers. >> look at the dollar index. it's down almost a full point today. strong dollar being a big headwind. we heard it yesterday. some of these other big companies. a little bit of relief there possibly coming? >> i think the market's fairly valued. i don't know what people expect out of this market. if we're somewhere 15 to 18 times earnings, things are slow. nothing's moving all that fast. you can't expect much. but you certainly can't expect the headwind for multi-nationals bringing their money back because of the dollar. we don't expect that much, so it's a stock pickers market. you have to decide whether it's

amazon or wal-mart. what's working? maybe you take a look. this is not just buy an index and hold on. you're hearing a similar theme here of squeezed margins. a slowdown overseas. wage pressures. all kinds of the same things that are affecting a lot of the different sectors right now. >> going into this quarter, a lot of the leading indicators are growing. we are looking at growth momentum slowing in the current quarter. we have to look at this for the next quarter. if we take a step back and look at the broader cyclical and secular picture, the u.s. economy is still very much on track. the u.s. economy is still the strongest area in the world. to your point, a lot of the weakness is coming from overseas. but those domestically focused companies, those are focused towards the stronger areas. and consumption over the next year will do quite well.

>> what do you do with fixed income? that trade that everybody was positioning for for higher rates is just not working. and a lot of people are sort of caught wondering which way they're supposed to move next. >> yeah. looking at the fixed income market for the very short term, it is an area of safety. but if we take a step back again and look at this from a secular perspective, bonds are almost the most expensive they've ever been in history. in real terms, if you were to buy a ten-year bond today, you basically earn zero the next ten years. >> they probably said that a few years ago too and look where we are. >> in this current quarter, the u.s. is going to face wicked growth momentum. if you look at manufacturing the last two months, you see it pointing lower. the ten-year is where it should be. if we take a look in six months, the u.s. economy does look like it will strengthen. >> i'll take a different part of that trade. we've been laddering bonds. we've been living in the triple b space, so it's hewlett-packard, it's goldman

sac sachs. things we think aren't going out of business in five years. we don't want a bond maturing today. meanwhile, we're still out far. bonds are i don't think for trading. i think too many people look at bonds as do we buy them? do we sell them? bonds are for income. bonds are for safety. bonds are for stabilized portfolios. just laddering them, if the interest rates go up fast, you wish you were up shorter. and vice versa. no big deal. >> i saw you nodding. let me ask you as you head toward the close. any kind of levels you're watching? are we doing damage to the downside? >> i'm watching wal-mart. i think it's a great example. it's a great example of etf related selling. for that matter, so many explained the logic behind amazon. that tells you the market is misplaced. >> you can't be that surprised.

>> the point is if you're an investor, that's what you need to look at. when you're a trader, you'll trade against that flow. >> a real significant business that allows people -- i ordered something on amazon sunday night on prime, got it monday night. >> isn't that great? and how much did they make? the point is, amazon has become a distribution network, not a retailer. they can't be priced and looked at as a retailer. >> but that's the retail landscape today. >> but you also want a company that makes a profit. >> they reinvest that cash in the business. it's what it's become. >> the guy who sells the entree for $15 that costs him 20, how do you make money? >> at the end of the day, it's not profitable. there's no reason to own that company. >> bill miller seems to own that stock a lot. >> why do i feel like i'm seeing boomer versus millennial on this issue? >> i'm probably the last person to sign up for amazon prime. they totally got me hooked. that's the funnel that bill jordan's talking about.

45 minutes to go here. the dow is down 154 points. wal-mart the biggest drag on that index. the broad index, though, the s&p 500 also giving up half a percent today, while the nasdaq is doing a little bit better. it's down ten. >> netflix posting earnings less than an hour from now. we'll tell you the one number to watch in that release. that's coming up. >> first, though, wells fargo cfo talking earnings in a first on cnbc interview. find out how wells plans to breathe new life into sluggish revenue growth. that is next. [announcer] sunday's your last chance to save big

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with sleep train's most popular stearns & foster mattresses. the triple choice sale ends sunday at sleep train. ♪ sleep train ♪ your ticket to a better night's sleep ♪ 45 minutes left in the trading session. a down day. wal-mart warning on earnings and sales down the road. and the beige book came out and didn't impress anybody with t r

their assessment of the economy. the s&p down ten. the nasdaq down 14. jp morgan one of the bigger drags on the day after missing earnings estimates on both the top and the bottom lines largely because of what they called a weak trading environment in the third quarter. >> shares also moving lower today, despite reporting better than expected quarterly profit in revenue. investors just are concerned about the bank's declining net interest income and exposure to the energy industry and loans there. >> we welcome back once again as we dig deeper into the report, wells fargo's chief financial officer john shrewsberry. good to see you again. westbound. >> thanks for having me. it's good to be here. >> what's your message on the third quarter? what was the feature for you? >> feature for us was great performance with no drama. we grew revenue, both interest income and non-interest income. our expenses were down.

our credit was in line. we hit our metrics with roe. roa is the best in class. about 130 basis points. we turned a lot of capital to investors. so we're very happy with the outcome in the third quarter. >> john, what about -- we were just talk about other businesses. but profit margins. especially relative to some other banks that were weaker there. what were the particular reasons for you? >> our net interest margin was flat quarter over quarter. it leads any other bank in our category by a long shot. it's different these days because we carry so much extra cash. it's not a metric that we manage toward. we're more interested in producing dollars. we've managed to grow that period after period. it's a little bit of an archean metric at a time when structurally banking balance

sheets are different. >> you guys have maintained -- you actually added reserves probably because of delinquencies of energy loans right now. what's your assessment of the industry? is it just a cycle thing? or is this boom that we saw up in the northern part of the country with the fracking boom that was going on? what's going on there? >> sure. so it's a big business for wells fargo, but the loan outstanding amount is about 2% of our portfolio. in this quarter, we did provide for more allowance against that part of our portfolio. because things are definitely -- crude prices have stayed lower for longer. it's a cyclical business. i'm not sure how long this leg of the cycle occurs. or maintains itself. we've been pretty clear with investors that we're prepared for it and we're working on it. providing for the exposure. fra there's bottom a lot of customer activity happening in this space as people take advantage of m&a

activity and restructure their balance sheet. >> as long as prices remain around where they are or go lower, you expect this trend to continue? is that what you're saying? >> i do for sure. it will have a big impact on wells fargo. about 2% of our loans are in energy versus 30% for mortgages. so our credit outcomes aren't really driven by energy. producers, mid stream companies, services companies to continue to experience the pain of lower crude prices. >> one thing i can't quite wrap my head around is looking at the loan growth that you and others have experienced, which is quite strong and expanding in the double digits in some cases for the u.s. consumer. meanwhile, this morning we got kind of a disappointing retail sales number. the beige book was a little bit more downbeat. and wal-mart, of course, has its struggle. so that dichotomy, i can't quite understand. how would you describe the strength of the u.s. consumer, the increase in loans that you're seeing and that sustainability? >> well, the increase in loans,

it's broad-based in our commercial businesses as well as consumer. the bigger growth is on the commercial side of things. so on the consumer side, we see growth in mortgages, and on the balance sheet in particular, it's prime jumbo mortgages, so they tend to be more affluent people. we see increasing credit card receivables. people are using their credit cards. and in autos. we've had a really strong year in autos. so all of us have seen balances move up somewhat. it's grown faster on the commercial side than it has on the consumer side. >> i guess in that sense, explain some of the pockets. just a question as well backing out to the net interest margins, but your business period. we have inflation break evens moving down significantly. and people talking even at the fed about waiting on rate hikes. it could be years before we get a rate hike at this point. what would that mean for your business? >> well, we've been talking to

investors for a few quarters about expecting a longer scenario, both at the short end and longer end of the curve and positioning ourselves for that. we definitely make more money, but the results we've generated in a zero interest rate environment for several years now have been record results for wells fargo, because we benefit from having a $1.2 trillion deposit base that has an average cost of about eight basis points to it. while loans generate modest returns, we've managed to produce industry leading results. >> so far so good. all right, john, good to see you again. >> cfo of wells fargo. >> 38 minutes left in the trading session with the dow -- we're back to the lows of the session now. down 185 points on the industrial average. >> netflix announcing its earnings less than an hour from now. we'll tell you what wall street is expecting next. also, kool & the gang.

yes, kool & the gang will be here at the new york stock exchange. the grammy winning funk band celebrating 50 years in the industry. the four original members of the band will be here. we'll talk game changers and where they see the music industry heading as well. maybe we'll get kelly to dance or something. i don't know. coming up. >> we're going to get bill to dance. hi watson. annabelle, your birthday is tomorrow. i'm turning seven.

what did you ask for? a princess. and a pony. you like things that begin with p. i like pink frosting too. will you have a cake? yeah. i was too sick to have one last year. the data your doctor shared shows you are healthy. are you a doctor? no. i help doctors identify cancer treatments. i want to be a doctor someday. i can help with that too. watson, i like you. ahh... steve, other than making me move stuff, ces. what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place that lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim? for all the confidence you need. td ameritrade. you got this.

a lot of talk about wal-mart today. take a look at boeing as well. that stock selling off after delta management made comments on its call today about the supply demand die unanimous is for boeing's 777s. >> here's a look at netflix, it gets set to record its earnings after the bell today. julia boorstin joins us now with a preview. >> the number one thing in focus is netflix's total subscriber streaming number and whether it can top its subscribers all over the world. analysts are expecting slightly more additions to subscribers.

earnings are expected to decline to eight cents per share as the company invests in that global expansion and more content. revenue is projected to grow 24% to $1.75 billion. the hot topics for the company's video webcast, which is coming up at 5:00 p.m. eastern, are netflix's content strategy in light of programming costs, which are expected to rise, as well as how a price increase is expected to impact growth here in the u.s. and how international expansion is going. i'll be back to break down the results after they break after the chosing bell. and the stock does tend to swing dramatically in either direction based on those subscriber numbers as well as growth forecast. back to you. >> looking forward to that. thank you for now.

>> what a turbulent day for those ipos to even attempt to price, especially albertsons, which we'll get to in just a second. there are close to debt-heavy companies. it's the biggest week for ipos. albertsons, it's hoping to price its offering between $23 and $26 a share. it would raise about 1.6 billion at the midpoint. then there's payment processor. it wants to raise more than three billion dollars at a price between $18 and $20 a share. we'll see whether they decide whether those ranges will still hold. what they'll look at first is the vix. it surged recently, but it's still lower than levels we saw in august. they'll also look at the closest comparable stock. for albertsons, that's kroger.

but also, wal-mart of course, which is one of the top two grocers in the united states. and we know how that stock is doing today. first data, you're going to look at tss global payments or fidelity national. fidelity fis has just turned negative this afternoon. but if these companies price below the range, they're not alone. the majority of deals that have happened since labor day have priced below the range, and the deals that have gone out and traded haven't done so well. they return to an average of negative 3%. some companies are saying why do this now? square would have a tough time going out if they are not profitable. 11 companies were set to trade each of the last two weeks. only five in those week. >> and we're not just talking about trendy social media or other technology companies. this is a good cross section

sector-wise with some pretty stable companies presumably. it's just lousy market conditions right now. >> these are companies that are going out. kkr, which owns first data, is publicly traded. >> there are other factors driving this process. volatility is just part of the mix at this point. >> they're earning their bonus today. >> pretty much dried up. they're really hoping to get some of those companies out of the pipeline. >> a lot will hang on what happens. thank you. >> time for a cnbc news update with sue herera. >> here's what's happening at this hour. iranian clerics approving the landmark nuclear deal with the west. sealing the final required step

in the process. it comes as iran's revolutionary guard publicized these images of an underground missile system that it says are ready to be fired. rescinded an honorary degree to bill cosby. court documents unsealed in july show cosby admitting to extramarital relationships, and in those relationships, some accused him of sexual assault. gop presidential hopeful donald trump says he doesn't plan on changing a thing on the campaign trail. he spoke with nbc's katy tur. trump also telling her that hillary clinton won the democratic debate in his opinion. michelle obama telling folks at the white house that failure and rejection are part of the process of achieving success. there you see, entertainer

smokey robinson at the white house as well. that's your cnbc news update at this hour. back to you guys. >> thank you, sue. >> see you later. >> kind of holding steady. there's so much to come with the ideal pricing, the netflix earnings. this is a very busy time. >> actually, hang in there is a barometer. >> the real fed story today maybe the divide within the federal reserve itself. steve leishman has that story coming up. >> wal-mart stocks suffering its worst drop in 15 years after warning investors of big earnings drops. later we'll see what wal-mart needs to do to rebound. stay with us.

welcome back. we begin with seema modi and a market flash. >> company shares are moving higher on a report from bloomberg that the two semiconductor companies are in merger talk. so there could be potentially further deal making to be had in the semiconductor space. of course, yesterday, we learned about a potential deal taking place with sandisk and micron

tech. now we're learning that analog devices and maxim could be exploring merger talks. we are seeing some other movers in the semiconductor space. also spiking in afternoon trade. back to you. >> liking the consolidation there. okay, seema, thank you for now. wal-mart's profit warning sending a shock wave across the whole retail space today. let's get out to bob pisani with a look e at the kaat the carnag. >> a lot of people saying it's not justified. obviously you think discounters will be affected. and that's the case. but look, big lots down 4%. target's down 4% almost. tjx down 1.5%. kohl's is down 1.5%. but it's spread way beyond that. it went into groups that don't have a lot of relationship here.

home depot dropped 1%. we even had luxury stocks. people kept e-mailing, what the heck is going on, just because wal-mart's paying people more money, affecting their earnings. why is everything dropping? ben willis was talking about the etf effect. i think he's on to something. put up this etf. this is the primary vehicle that people used to own retail stocks that trade etfs. they're equal weighted. 1% apiece. people have come in and sold the daylights out of it. i think the key point is that put a lot of pressure on the underlying stocks, because the market makers had to turn around and sell, redeem some of these shares in these stocks. i think that put some pressure on a lot of these other stocks. back to you. >> i'm here on the floor with matt. have they overdone this selling today?

>> probably not. i would have thought it would have been worse. economic news out of china, that was really soft. that set the tone for overseas. we didn't really see that until later in the day. even with the wal-mart bombshell that came out. >> looking ahead, two big things that came out. the netflix earnings. that can set the tone. that leads to some volatility. and how would you like to be pricing an ipo tonight after this market? >> in honor of kool & the gang, we're going throwback. these two companies were previously listed. pretty impressive. tough night to price it, i would think. netflix is the first time they're going to report after the split, though, if i'm not mistaken. so it should be a little less volatile. certainly one that's going to be a tone setter for the morning. >> what's your bias right now? >> i'm still very tentative right now in this market here. we saw a huge run-up last week. if we see a retrace back to maybe 165 on the dow, that would take negative headwinds out of

play and put us looking at further than the fourth quarter. >> all right. very good. thanks very much. see you later. kelly? >> thank you both. a great divide exposed among key decision makers at the fed. our steve leishman playing a part the that. he joins us now. >> thank you. one newspaper used the term mutiny at the fed to describe what's going on. two fed governors on cnbc yesterday. an interview i conducted. saying they don't think the fed should hike this year. she's among those who sees the fed hiking in 2015. so it's pretty unusual for the washington-based presidentially appointed senate confirmed governors as opposed to the president's to differ with. but here's what he said yesterday. >> right now, my expectation is where the economy would go. i wouldn't expect it would be appropriate to raise rates. but i want to hasten to add that that is an outlook that changes based on developments in the

economy and our being forward looking about it. >> all of that leading diane swonk to say disagreement over the timing of liftoff is getting much more heated and personal than i would expect. yellen spoke before the most recent jobs report, the second weak one in a row. speaking of moderate growth, not falling off a cliff, but certainly not accelerating. kelly? >> steve, that's a point. and certainly something to watch in the fed speak coming up. speaking of the fed bill, the ten-year today, interesting moving below 2% as the dow gives up 150 points. some beige book disappointment. and some specific areas of that space on people's minds today as well. bulls are watching, bears are watching. everyone's watching for netflix earnings. we'll bring you some analysis when that hits the tape.

♪ everyone around the world come on ♪ >> everybody's been humming that tune here on the floor of the new york stock exchange for the past couple of hours. it's "celebration" by kool & the gang. the original members of the gang. kool & the gang themselves are right here at post nine before they ring the closing bell today as they celebrate 50 years together. that's coming up next on "closing bell." big day? ah, the usual. moved some new cars. hauled a bunch of steel. kept the supermarket shelves stocked. made sure everyone got their latest gadgets. what's up for the next shift? ah, nothing much. just keeping the lights on. (laugh) nice. doing the big things that move an economy. see you tomorrow, mac. see you tomorrow, sam. just another day at norfolk southern.

welcome back. kool & the gang helped celebrates weddings and bar mitzvahs. we'll celebrating them and their 50 years together. >> and the four core guys that make up kool & the gang are with us. we're thrilled to have cool himself, robert bell. his brother ron is there. george brown and dennis d.t. thomas. great to see you guys. everybody's been humming "celebration" the last several hours, getting ready for your -- get this, 1964, 51 years ago, you guys were all teenagers across the river here in jersey city.

now here you are at the new york stock exchange. >> are we making some money today? >> did you ever imagine that you would ever come this far? you guys have so many hits over that 50-year period. >> here we are today. and it's a great day. and we're happy to be here. >> did you mean to be musicians? or were you expecting different career paths? >> no, musicians. >> there was no plan b? >> architecture. >> all right. he's going to be an architect if things didn't work out here. the sound that you guys created at that time was so cutting edge and now it's mainstream. >> absolutely. starting back, listening to motown and a lot of the jazz artists, music between the r&b

and the jazz and the funk created the kool & the gang sound. >> how much do you guys perform together today? >> about 100 dates a year. >> we've done it all. you name it. >> a lot of the hip-hop artists are sampling kool & the gang music. >> that's fine with us. >> i'll give you an account. >> more music from you guys. you still tour. but are you still recording? you just did a christmas album, right? >> yes, george put that one together. it was a milestone for kool & the gang. started rounding up all of our cast and crew and put it

together. we feel that we have a classic album. >> that's cool. >> what's the biggest money mistake you've made? >> money mistake? >> oh, dennis has never made a mistake. >> money. that was a mistake. >> are you happy with the way artists are paid today in the industry? with all the streaming services and so forth? is that okay with you? >> they said it's going to take about five years before it goes back up. now it's like .01 or something like that. >> you want to see it go back up? >> yes, we do. >> you make most of your money touring, right? >> guys, really, a thrill to have you here today. >> thank you so much. >> kool & the gang joining us here, celebrating 50 years together.

i think you guys get along a lot better than the rolling stones who have been together the same amount of time. >> absolutely. >> thank you, gentlemen. >> we'll take a quick break. we'll come back with more. we'll talk about where you're putting your money these days. scott minor is back from a big investment conference.

nine minutes in the trading session, thanks to a couple of things. a sort of lackluster beige book today, and of course, that warning from wal-mart. >> joining us now in a cnbc exclusive is scott miner. global chief investment officer. welcome. what were the topics of discussion today? >> well, at the meeting, we try to take a look at what's going on in the big world, global and economic data. obviously there's concern about china. and the impact that raising rates might have on global financial markets. >> even though while you were there, the ten-year was below

2%? >> exactly. and, you know, obviously people get their chance to express their concern about the timing of raising rates, and, you know, as you can see from some of the members of the fomc over the last few days, we have four members that are voting that are actually opposed to a rate increase right now. so this is a very big topic for the fed. >> and of course, we've got stories like wal-mart and other companies that have raised the minimum wage who are now having to say well, it's cut into our margins and we're not going to be as profitable as we thought we were going to be down the road. >> well, that's right. and on top of that, we have seen the effect that the strong dollar is having on the economy in terms of exports. and as the dollar continues to strengthen, export growth is dragging. if the fed does raise rates, that may exacerbate the dollar

appreciation. >> if i'm holding bonds, what's more important to me? the message from markets today is that global developments, global disinflationary pressure trumps positive wage momentum in the u.s. economy. is that expected to last in your view? >> i personally think so. i think that the global economy is more important fundamentally than getting too concerned about raising rates near term. we are not seeing the kind of wage growth that we need, that would be associated with full employment. so i don't see any need to have any urgency in increasing rates at this time. >> where are you going to go for income? the market is the only place to go, right? unless you'll go for high yield bonds. >> first off, dividend stocks are still very attractive. history shows us once the fed does move and raise rates, that stocks continue to rise for a few more years.

there's the old rule about three steps and a stumble. >> i haven't heard that in a while. >> the other place that looks really attractive right now is high yield. i mean, the backup we've had in high yield spreads, especially in industry with the fallout in the energy market is making below investment grade a pretty attractive place to go. >> yeah. >> how long do you think it would take to get those three steps? the three steps are fed rate increases before you get a stumble in the equity market. janet yellen is warning it could take years before we get to normalization. >> i think it could take us a long time. i think any rate increase like 100 basis points is probably something we're not talking about until 2017 or beyond. >> what are you recommending investors do here? can we take specific sectors? a lot of hedge funds.

>> obviously, below investment grade. bank loans and bonds. i think it's too early to get involved in energy. i think dividend stocks are a great place to go. if you're a retail investor, there are a lot of great closedown funds that are big discounts. and then for those who aren't fainthearted, i think it's time to look at the emerging markets. >> wow. he said that with a straight face. being a contrarian. >> it's interesting, for sure. >> it's funny, because a lot of people label me as a contrarian. i don't try to be a contrarian, but when you see a market down 80% in dollar terms over the last few years, and unless we're going to just shutter brazil, in the next five years, i think it will be a good performer. >> all right, scott, thanks for joining us. busy afternoon for scott miner from guggenheim partners. >> we'll come back with the

closing countdown, and it's time for netflix earnings as well. >> stay with us. "closing bell" is back in two.

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when you're not confident your company's data is secure, the possibility of a breach can quickly become the only thing you think about. that's where at&t can help. at at&t we monitor our network traffic so we can see things others can't. mitigating risks across your business. leaving you free to focus on what matters most. about 90 seconds left. i was going to show a chart comparing the dow with wal-mart today, the biggest drag. it skews the chart so much, here is wal-mart after that surprising warning there. it's down 10% right now. its worst day in 15 years.

dow itself is down 1%. the yield and the ten-year also went lower, especially after the beige book came out at 2:00 eastern time today. we're holding at that 1.89% level. getting ready for netflix now. as julia boorstin pointed out, they're looking for that subscriber number. they want to see growth in that very important category. netflix right now one of the few positive stocks. >> i know wal-mart is a major problem. i just want to put up boeing and point out that boeing's decline of $6 is an equal problem for the dow. delta came out middle of the day, talked about a bubble and wide body jets. you see boeing down 4.5%. down $6 right there. that's a big issue. tonight, all i care about is first data. biggest ipo of the year. the big question is they'll get it done. can they get it done at $18 to $20? all the ipos have been cut. it's going to be a big hike for

the ipo market. >> we'll see you a little bit later. kool & the gang celebrating 50 years together, ringing the closing bell. at the nasdaq, it's the winner of the 2015 business plan competition. stay tuned. netflix earnings and those two important ipos on the second hour of "the closing bell." see you tomorrow, kelly. thank you, bill. and welcome to "the closing bell." i'm kelly evans, everybody. the dow going out with a decline of 159 points on wall street today. the s&p giving up ten. the nasdaq giving up 13. and we are waiting now for netflix earnings due out any moment. in the meantime, so much to talk about. a lot of things coming out of nowhere today. we'll start with wal-mart. joining today's panel, we have cnbc contributors carol roth and john najarian in the house. christine shore, and guy adami.

welcome one and all. what do you do with this market? do you think retail is being sold indiscriminately, or is there a real concern that amazon is the only game in town? >> well, there's a real concern about the damage done by amazon. but also, it was a self-inflicted wound in the case of wal-mart, i believe. they had the opportunity, kelly, to do something about that earlier in the day. and perhaps even with the guidance days and weeks ahead of this, they chose not to do that. they chose instead to surprise the market. the market doesn't like those kind of surprises. there's only one kind of surprise the market likes. there's no good that can come out of that kind of announcement one hour into the trading day. >> wal-mart having one of its worst days in decades. first let's get to breaking news on the two big ipos. kate kelly joins us on the news line. kate, what can you tell us? >> from what i hear from multiple sources, the two big

ipos expected to come tonight are going very badly. partly because it's wal-mart dues from earlier today. on the albertsons front -- >> kate, we just lost you. start again on your thought about albertsons. and i want all of our viewers to make sure they heard you saying these ipos which are supposed to price tonight are going "very badly." >> in albertsons, the intended range was 23 to $26. we're now hearing they may price at $20 or less. apparently there's even some thinking about the possibility of postponing the deal, though i don't want to say that too strongly, because that's not the predominant from what i know. there's talk that that deal will price at $16. some real disappointment brewing here. these decisions were never made until after 4:00, but it's not looking good from what we hear from multiple sources.

>> we know the ipos actually have been struggling this year, despite markets being more open to them. these two in particular, how strong is the impetus for them to go public, since they have such high debt loads? >> the albertsons deal has been problematic. i believe this is their third initial public offering after two takeovers. most recently, this same calendar year. now wants to take them public again. apparently they have a slightly stronger stomach to come public at a reduced price. there was a bit of urgency on the part of the issuers. but it could be much better in terms of the environment.

>> isn't one of the challenges that both of them are losing money? these are not two companies that are killing it on the earnings side. isn't that problematic in this kind of market? >> absolutely. and i think leverage is certainly a concern, too. so i think all this came into play, for albertsons particularly. but wal-mart provides negative guidance. a huge damper today. >> kate, we'll let you go. thank you very much for the update. our kate kelly on those two big ipos. expected to price tonight. wal-mart was the news of the day, of course. now netflix reporting a seven-cent earnings number. looks like it's just missing the consensus forecast. let's get straight out to julia boorstin. >> that's right, kelly. netflix earnings coming in line with the company's guidance at seven cents per share. that is a penny less than wall street analysts were forecasting. total revenue is coming in at $1.74 billion. that's a little bit light. analysts had been forecasting $1.75 billion. the most important number for netflix is, of course, the

subscriber number. it's coming in just a hair stronger than expected. total net additions was 69.17 million. it's 70,000 stronger than expected. in the u.s., it's .88 million new subscribers. the international numbers are stronger than expected. 2.74 million international subscribers, which is heavier. looking at what is driving the lighter than expected results in the u.s., they say it's in part due to higher than expected involuntary turn. the inability to collect from certain subscribers, because the transition from regular credit cards to chip-based cards. but they say they're making progress on that. in terms of the forecast for the rest of the year, they say they will have added about six million members in the u.s. alone, and they're forecasting the addition of 1.65 million u.s. new additions, which is

down, but the international down from a year ago quarter, but the international additions are expected to be stronger than expected in q 4 of 3.5 million. so by the end of the year, netflix is predicting it will have over 74 million streaming subscribers. one other key thing to note here, foreign exchange impact, $96 million. it's slightly more than the prior quarter. they also say there has been no impact from losing the epix content since they did not renew that deal. kelly, back over to you. >> julia, thank you. turning to the panel, a lot to unpack here. but guy, pin cards? >> what was that? >> netflix said it's involuntary, so netflix added only 880,000 u.s. subscribers. they said they had some involuntary churn because of the new chip and pin cards that were mailed to everybody this year. i don't know if it's an excuse or a telling point that a lot of retailers have to grapple with right now.

>> there are a lot of them out there. we give them a lot of ammunition going forward. i still think it's the stories, but i've got to tell you, these sub ads domestically and internationally are not what i was looking for. i thought it would be much better. i don't think earnings is a factor. with netflix, it's not that big a deal. it's all about net ads. and they're just not there. i will say this. three or four weeks ago, probably longer now, we had mark cuban on the show. the stock sort of held at the 95 level. he was bullish and it never looked back from there. we're trading 95 now. my sense is it holds this level. with that said, you will hear the bears now come out in earnest talking about how the netflix story is now slowing down and they're not deserved of the valuation of the markets given them. >> we saw a drop of 26%. guy just mentions mark cuban. mark stepped in on that day.

it was a great trade. not for me, by mark. i think a lot of what we're going to look for tomorrow is exactly what we're saying. virtually everybody on the street just kept ratcheting up their targets. rather than being cautionary and/or telling people to take money off the table. after another big drop, exactly a year ago to the day almost. this is going to be an interesting thing to see how that plays out tomorrow. >> guy? >> listen, i still believe the netflix story and i've been behind the netflix story and clearly have given this number. it's been wrong to stay with it as long as i have. i don't think the netflix story is broken by any stretch. i still think it's a netflix world. i think today it's impossible to replicate. that might change in the years to come. i still think it's a netflix world that we all sort of reside in. it will be interesting to see if we can hold this 95 level. but my sense is you take a shot

here at 95 and let the chips fall where they may. >> as we're joining this now with some detail, high, julia. >> high, kelly. there's some more color here in terms of netflix's content strategy. programming costs are going to continue to rise. they think the internet tv is becoming increasingly mainstream and traditional media companies are adjusting to the shift. also said it's a great time to be a creator of content because studios make content to sell it. while there are new bidders, they are basically acknowledging that some studios will choose to license content to services like them. others may not, but that they still have a lot of content to select from. so this is basically hastings acknowledging that competition for the kind of content that they're interested in is rising, but they are saying that they still have a wealth of options in terms of licensing that content. they also point to the success of some of their new series like narcos, saying it's been successful in latin america in

particular. also talk about the high profile shows, like "how to get away with murder" that they have licensed. so clearly, this is a story here where we're seeing faster than expected international growth and u.s. growth that's not growing, not as fast as expected. >> those shares down about 11%. what jumps out to you? >> we're not used to seeing this from netflix. it's not really about the revenues and the earnings. it's all about the subscriber numbers. those fell short unfortunately this quarter. eng wh i think what investors need to be aware of is the cost. for their original content. you have to spend money to make money. but, you know, they just announced they're increasing their prices. that's in order to maintain margin. that's something i'd be looking at going forward. >> and you heard it from les moonves. he said we love netflix.

>> i would argue the epix deal -- they just ended that deal at the end of october. you also need popular programming to keep your consumers happy. >> just to everybody knows, this is apparently netflix's first earnings miss since the first quarter of 2007 according to capital iq. >> i want to talk to you about the shift in the business model and the risk and reward change that this means for investors. one of the big things that netflix has decided to do is to create its own content. while its has its own original programming, it's been licensing those from other houses and other studios. now it's going to go into the production creation business. which takes a very different skill set and i think is a much bigger risk/reward play, which i think shifts sort of the investor appetite for the story. >> i think you make a great point. you don't have to identify yourself. you just say hey, guy, it's

carol. the concern about netflix is they were paying too much for content. as they try to pivot, they're probably going to be some growing pains. they have taken one misstep in reid hastings' tenure. that was in july 2011. you saw what happened to the stock. it got obliterated. since then, they've done everything right. what you're talking about right now is potentially their second misstep over the last seven or eight years. i think it's still in tech. i think the story is okay. i encourage everybody to listen to what bill miller said today about netflix. with that said, i get that this is an environment where people shoot first, ask questions later. >> we'll have more coming up on this in just a couple moments. >> i'll do my best. >> guy adami coming up with the "fast money" crew at 5:00. we'll be talking about the

earnings webcast. christine, thank you so much. >> thank you. >> appreciate it. >> much more on netflix on whether you should be buying or selling the stock right now. and what's wrong with wal-mart? can anything fix the slumping retail giant? how much would it cost? that's later on "the closing bell." cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances.

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welcome back. we have some breaking news on square with julia boorstin giving us these details. julia? >> hi, kelly. that's right. square has filed this registration statement. it's s1 for its proposed ipo. it's looking to file to trade on the new york stock exchange under the ticker sq. its proposed maximum offering is $275 million, though it could be a place holder. we can expect that number to change. some key interesting numbers here in the s1. big losses for square in 2014. losses of $154.1 million, and in the first six months of 2015, losses of $77.6 million. also it notes here that dorsey is committed to being ceo of square as well as twitter. of course, he was just recently named permanent ceo of twitter.

just a keynote about who those key underwriters are. goldman sachs, morgan stanley, jp morgan, those are the lead joint underwriters, and also barclays, deutsche bank, jeffries also additional book writing managers for the offering. back over to you. >> julia, thank you. kayla joins us. not the ipo we were expecting to be talking about right now. >> keep in mind that under the jobs act, you have to put your s1 out there publicly about three weeks, or at least three weeks before you plan to trade. so this is not really common area -- >> some have been out there for months and years. >> and they get delayed and kicked around a little bit. so this is not saying square believes this is a good ipo market. maybe the market will turn around. in a few weeks, they'll be well-positioned to do this. >> julia reported it's worth noting. morgan stanley leading back in july when the reports first came out. and she did mention the loss numbers. that is going to be a tough story --

>> 150 million last year. >> on the road to investors. it's not like it's getting any better this year. $77 million in the first six months of this year. and that's on about $471 million in revenue. interestingly, about 62 million of that is what it calls starbucks transaction revenue. so revenue coming in from starbucks. of course, it's a small business story. but the fact that they are losing money this quickly, cash burn has been a big story for this company. it looks like it needs the proceeds. and i would actually say $275 million doesn't really look like a place holder. usually, they go with 100 million if you have a place holder. so we'll see. i'll make some calls and hopefully have more details. >> stay here for a moment, if you would. we're going to bring in ross berger, max wolf as well. we have to talk netflix in a moment. but first, you going to buy sq? >> not a chance. the last thing i need is another money losing jack dorsey stock to add to a portfolio. i like square conceptually, but

i just don't think it will ever make money. >> max, you feel any differently? i know we're not asking you necessarily as an investor, or maybe we are. what do you think? >> we do follow the company. i know it well. i followed it a bunch of years. i think i wrote one of the first reports on it a few years back. they've continuously wrestled with trying to make money. they seem to have not found the exact right recipe. they've kind of gotten into the lending business, so they have an interesting new rollout here. but they're really making money on these days using the information they have about merchants to advance them capital at pretty high interest rates and automatically repay themselves through the square transactions that small businesses use. we do think that's a crowded space, but an interesting one with big margins. we think the company is going to try to reinvent itself again in an interesting way. and again, the lead here is are we really going to see mr. dorsey run two kpaerncompanies,n a road zoe and one in a turnaround? i have a feeling we haven't seen it before because it's a terrible idea. >> i am just shocked that underwriters would bring -- even

think about bringing this to market or file this. we've seen so many potential ipos that have been pulled back. rumblings from various investment bankers, a lot of people thinking about doing ipos are delaying them until next year, or thinking about m&a transactions. the fact that this company isn't making money, it sort of looks like twitter 2.0 all over again. why would you open and expose this company to the public markets now, you know, beholden to investors every quarter, when you can sort these things out privately? i think that's a giant mistake. >> absolutely. that's the biggest red flag. they want to dump this on the public. public beware. jack dorsey can't run two companies! it's impossible to do! please, beware of this. >> kayla, i would just wonder what the company is going to say in its road show, knowing these are the very points they'll have to serve investors are. >> the opportunities are endless, that we are moving toward mobile payments, that small business is the story of

this country. you can pretty much write the road show. >> they should take kayla on the road. >> and to kayla's point, though, it appears they need the money now. in other words, obviously silicon valley hasn't turned negative on jack dorsey and his companies. however, it might be dearer, that money may come dearer than they think they can get from the public. >> that's a giant red flag. if you can't get that money in silicon valley and you have to turn to the public market for it -- >> this is the type of company that already has a revolving credit facility. it's already raised debt. it pretty much has tapped whatever money is available. so this is something where it's just adding new equity to the capital -- >> it's a dying unicorn. >> one conspiracy theory out there, sometimes bankers do file these public offerings to accelerate an m&a process, so possibly this is being done if maybe something's courting them as a way to say hey, you need to move into this m&a process now.

a possibility, not necessarily a probability. >> ross and max, i know we have to shift and talk about this big move in netflix after hours. it's why we wanted you guys here anyway. this is one of those stories where what's happening in the u.s., you're the raging bull on this name. what do you think about the subscriber number or lack there of, and the fact that they're pointing to chip and pin, these new cards, as part of the reason? >> the first issue is subscriber growth in the u.s. is tough. it gets tougher and tougher. so they already have 40, 50% of the country signed up. so it does get incrementally harder, but i think the real story is international. do you know how many tv viewers there are in the world? i mean, you're talking billions. and so the potentially for them to grow in markets all around the world is huge. because u.s. content is king across the world. we love the name long-term, and you've got to look past these headlines. you've just got to look past

them. >> your point was that this stock -- even down at its lows after hours, you said this isn't nearly as bad as we've seen, and already netflix only down about 6%. what do you make of that? >> well, i think that by keeping unique content on their site, and carol and i off camera were talking about whether or not they need to produce that content or not. my point was really that epix and deals like that, they don't want to be a me, too. if i'm reid hastings, i never want that me, too, as far as having this content available on multiple platforms. so by putting that line in the sand, i think that is something strong that netflix can leverage. >> as a couple, you really only need to have a couple of shows that you're really actively bingeing on during any month in order to keep your subscription. my husband and i are doing this on the weekends instead of going to the movies. so it's certainly worth what you're paying.

it's completely worth it. i am still concerned. i think they're doing a great job of choosing it. i'm just worried about them trying to produce it themselves and getting all the extra creative egos involved that goes along. >> you're missing something here. i'm in hollywood. i have friends who do this for a living. and everybody wants to work with netflix. they are really great with producers and directors. and every good -- literally, every good project is going to netflix first because they want to go to netflix, number one. and the second thing is netflix could literally get to $15 a month, and i don't think anybody would change. people don't watch tv anymore. what they do is they watch netflix. right now, hbo is $15 a month. why is netflix so cheap? so they've got a lot of ability to raise prices. let's not forget that. >> before we go, max, you want to respond to that? >> we like the story. we like the cord cut clearly.

there's a bit of a risk here that basic all bundle cable goes the route of a land line. we're seeing mobile penetration as well. generally, though, we do think this is the problem with being priced for perfection. too across the board. being priced for perfection means people punish you for what's long-term smart and short-term painful. that's what they're doing here. they're making their own content. they have to make sure it's good. they're going to have some missteps. when you make your own content, some things are really expensive and they flop and they're becoming a little bit more like the studios, that some people gave them this valuation for not being. and we're going to see some valuation adjustment. but we like the story. we like the future. we like the market they're in. >> all right. we'll leave it there. thank you, guys, so much. max wolfe, ross gerber on a crazy afternoon. two of the biggest ipos this year could price any time now. we just got pricing from square. we'll get you the details on first aid and albertsalbertson' soon as they do happen. plus, low oil price aren't

stopping a massive rail terminal from being fwhinorthwest.

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look for the experience and commitment to go the distance with you. call now to request your free decision guide. devastating environmental effects are threatening to rail plans for a major terminal in the pacific northwest. there's where our morgan brennan is and she joins us now with those details. hi, morgan. >> hey, kelly.

just for a little bit of background, his partner savage companies are looking to develop this site into one of the largest crude by rail facilities in the country, capable of receiving up to 360,000 barrels of crude oil per day, unloaded off of bnsf trains and on to tanker ships headed to west coast refineries. but as we have seen with many projects involving oil and transportation, there has been some opposition, especially given some of those oil train accidents we have seen across north america in recent years. now, this summer, the army corps of engineers announced further scrutiny of this plan, a decision that could cause delays, but they remain confident that this project will get green lit and it is encouraged by a recent survey by dhm research that nearly 70% of area residents do support this terminal thanks to the expected economic benefits. still, the opposition from some locals and environmental groups coupled with all of that regulatory red tape sheds light of an issue that is really

affecting this region as a whole, and that is lack of infrastructure to get domestic crude from the middle of the country here to these west coast refineries. it's an issue that can really only be remedied by increased capacity for oil trains. so while this is the largest proposal, it is just one of a number of projects that are currently under review, including one, a smaller one from new stark here. and another one from royal dutch shell in northern washington. one of the things that it is doing as it goes through this approval process is it's beginning to implement these. these are brand-new next generation tank cars that are expected to increase safety and hopefully ease some of those fears around oil train accidents moving forward. back to you. >> none of this looks cheap, morgan. a lot, obviously, at stake here. thank you so much. our morgan brennan out there in vancouver, washington. let's send it over to seema modi for an earnings update. >> shares of xilinx moving

higher. revenue of $528 million versus the expectations of 530 million. so basically in line. earnings, 48 cents versus the expectation of 47 cents. so it was a beat on the bottom line. guidance slightly above estimates. you can see the stock higher. better than 3% in afterhours trades. >> there's a pop. thank you for now. appreciate it. time now for a cnbc news update. let's get to sue herera. >> hi, kelly. here's what's happening at this hour. the congressional budget office says the treasury will run out of cash in the first half of november if the federal borrowing limit isn't raised. the nonpartisan office moved up that forecast by several weeks due to a larger than expected deficit in september. gabby giffords joining women leaders from across the kun tco to help a new coalition. the announcement comes during domestic awareness month.

nine former american servicemen who were held as japanese prisoners of war during the world war ii era returning to japan. they recounted their memories and how they coped with being p.o.w.s at the american university in tokyo. this is a fascinating story. researchers found the malaria protein is attached to a certain carbohydrate in the placenta, which also exists in cancer cells. so they attached a toxic substance to the protein that can destroy cancer cells. so far, it's cured cancer in mice. a promising development, one we're going to follow for you. back to you. >> fantastic, sue. thank you. >> we're going to talk about that next. plus, how is nike thriving while fellow consumer giant is struggling? we'll hear from mark parker when we come right back.

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welcome back. it was a mix of micro and macro. the dow closing down 157 points. the s&p nearly ten. the nasdaq about 14. it held up relatively better.

although that ten-year was below 2%. netflix just reported its earnings. here's a look at shares. moving around after hours as they often do. apparently the first earnings missed a tad since 2007. it also had the domestic subscriber numbers coming up short. only down about 19% compared to the 14% decline we saw. two consumer brand and staff market giants wal-mart and nike both holding investor days today. the reaction and results could not be more different. sara eisen spoke to nike's ceo mark parker earlier about both companies, and she joins us now. what a day, huh, sarah? >> what a day, and those stocks tell it all. nike and wal-mart going in completely opposite directions for the day, and for the year with nike up more than 30% as the dow's best performer. both consumer global giants. it's something i talked about with mark parker. i said if you look at this chart, you might get a very confused sense of the global economy and the global consumer.

right now, he said, no matter what's happening out there in macro economic environments, nike is firing on all cylinders and connecting with its consumer. and he pointed to china as an example of a place that's seeing an economic slowdown. when so many other companies are struggling there. nike is hitting double digit growth. have a listen. >> it's been noteworthy, i think, nike's performance in china, how we've done quite well amidst i think a lot of concern. not within nike, but within the overall market. >> you're not seeing any of the slowdown in the chinese consumer? >> we're not seeing it. in fact, our brand is accelerating. >> that tells you what you need to know. 30% revenue growth in the region last quarter. nike actually took the opportunity to raise its target for revenue. says it plans to be a $50 billion company by 2020. that's an extra $20 billion from where it is right now. it's pretty aggressive and optimistic, the way it plans to

get there, three initiatives that are executives are talk about today. e-commerce, super fast growth digitally, especially in mobile. the jordan brand. they're planning to take this far beyond sneakers and grow it times two to a $4.5 billion business in five years. and then women's, which is a huge growth area for them as well. it's growing faster than mens. a lot of talk about the product and innovation, why nike is separating itself from other companies around the world, no matter what business they're in, kelly. >> yeah, that earnings report that they had, had our jaws dropping, frankly. >> thank you so much. a different picture in wal-mart's stock. free fall after the earnings are likely to be down 6% to 12% last year. just a couple of hours since this morning. factors for the negative forecast, strong dollar but mostly higher wages.

the really interesting thing about this was the ceo was on cnbc this morning. didn't really talk about this kind of hatchet falling. later on seemed to point to analysts. the investment community said you guys should have been able to do the math and said we were raising wages to ten bucks. what did you make of how this announcement came down? >> i think he had a point. i take some responsibility along with my fellow analyst. we should have figured out that the expenses were going to be higher than what we were planning for. so i think doug's got a point to say hey, guys, we're going to give you longer-term outlook, but we're putting in more investment in the stores. you all didn't figure that out. so one of the reasons i think they gave longer term guidance is for us to really get that right. >> is that now going to prompt you to look across the entire retail space and start doing the math, not just on wal-mart which had a nice round $10 number, but

everybody affected by higher minimum wages in much of the country? >> wal-mart was taking its minimum wage up to $9 an hour earlier this year and $10 next year. that's somewhat different than others. wal-mart is trying to improve the experience in the stores and that's key. i think it's the right move. i think it's a longer term move. when i think about wal-mart over a little bit longer term frame, doug mcmillon is a young ceo. they've got a long tenure in front of them. he's setting the company up to do that. he's saying early in my tenure, we've got to pick some of the store operations, over the last couple of years on their growth, leverage, and return mantra for the financial community. they probably will grow leverage returns. so a little bit too much leverage. he said that early in his presentation. i think they're putting in more expenses to fix some of what should have been in the stores

earlier. >> bud, this is carol roth. last night during the democratic debate, we heard about income inequality. we heard from the democratic candidates that they want to raise the wage and accelerate that kind of a raise. given what we've seen today from wal-mart, if they were to accelerate more quickly, what would that potentially do to wal-mart and perhaps others in this space? >> well, remember, carol, their average wage is actually higher than that. there was only a certain percentage -- a smaller percentage that were affected by the minimum wage increase. but remember, that doesn't affect the structure. so as they talked about, that structure actually does raise a little bit, put more hours in the stoemre. 8,000 new department managers this year for the holiday, they're putting in 3,500 department managers for pickup. some additional costs that are going into the structural cost inside of the stores.

>> and just pointing out, just what a hit wal-mart has taken in terms of its erased market cap since its announcement earlier today. >> take a look at -- they erased cvs from the value of the stock today. they erased twit foreign minister the val-- twitter from value of the stock. 64 747s with the money that wal-mart lost today. i would think that even though you're being kind to wal-mart, a lot of folks were very upset the way this was not guided preceding this announcement today as well as the fact that they had the opportunity when the earnings came out, and instead, they let the stock trade for an hour before they slapped the market across the face with a dead fish. i'm just curious. you as an analyst, what did you think of that? wasn't that disrespectful to both shareholders as well as to

the analyst community that covers it? >> perhaps the timing on this day is somewhat disrespectful. i could grant you that. but quite frankly, wal-mart's never given longer term guidance before today. today they gave us that longer term picture. and they didn't change this year's guidance. that guidance is still 440 to 470 for this year. and what i think they were trying to point out is you guys, i think that's a fair commentary. for now, thank you for joining us. >> thank you very much. >> don't miss wal-mart's ceo doug mcmillon, he's going to be back on "mad money." he's going to speak with jim cramer about today's moves, the timing of that announcement. a lot of questions still out there. you definitely don't want to miss it. netflix reporting third quarter results a little

earlier. the stock is falling. not even raising prices can slow the company's momentum. and it's a very good sign. we'll talk about pricing. and bernie sanders declaring americans are tired of hearing about hillary clinton's e-mails at the debate. they will recap that moment and other high points of the first democratic debate. and don't forget, "squawk box's" 20-year anniversary. tomorrow morning, you can join the squawk team and help celebrate throwback thursday in the plaza outside the squawk studio from 7:00 to 8:00 a.m. eastern. send an e-mail to squawkbox-tbt @cnbc.com. d it- ir it. (announcer) at scottrade, we share your passion for trading. that's why we give you the edge, with innovative charting and trading features, plus, powerful mobile apps so you're always connected, wherever you are. because at scottrade, our passion is to power yours.

netflix releasing its third quarter results earlier this hour. the stock currently down about 7%, half of what we saw in the lows. joining us for more now is kevin landis of firsthand capital management. new customers, and at that ultimately will be a good sign for netflix here. you're taking this afternoon's announcement in stride then? >> well, you know, when you miss on any metric and it clobbers the stock, you can't be smiling at every facet of the announcement. but they have pricing power and they're still growing. and those are two things you really look for. a company on a roll has that kind of power and momentum. those are the things that will really matter in the long run. >> we had a guest who said he thought people would easily pay

$15 a month for netflix, who is currently raising prices for new customer. do you think that's where we're heading, that their pricing power can go above $10 a month? >> well, have you looked at your cable bill lately? the whole spectrum of gouging versus bargain, they're still way down at the bargain end. so yeah, they can. i mean, they're smart not to. and they're smart to kind of turn the dial just a little bit when they can. and to get better content. i mean, the next "game of thrones," imagine if that's on netflix, that would be pretty powerful. so i think they're doing it the right way. >> carol? >> i wanted to ask you about the u.s. subscribers. the growth was lower than expected and part of the reason they said was the conversion to these chip cards, which i totally get. i had the same issue. my netflix disconnected. i had to put in my new number. isn't that the type of event that gives people pause? if you're already paying for it and you don't have to do

anything, you're probably not going to be proactive to cancel it. but when your credit card changes over, you sort of start to do the math. is that something that we should be concerned about going forward? >> i don't think that it's so much that it causes you to do the math. because again, netflix -- it's not that expensive. what it does is it takes people who are busy and sort of hits pause on them and they have to go back and straighten it out. and think of a busy person during a busy day. they have time to go back and update all their accounts? probably not. you're going to have a little bit more insurance. but that's just a hiccup, i think. >> i asked john on twitter if people would be willing to pay $15 a month for netflix and their answers were revealing. their responses were no, i don't watch anything, it's too hard to find stuff. and other answers were yes, my kids love it, i think it's indispensable. >> i think it is indispensable. i don't know if 15 dollars is the break point. but it's an awful lot of entertainment for very little, especially with the fact that as

i've said before, they have proprietary content, not just what they make, but what they buy that they don't want anywhere else. that is the value. >> it's important, because if this company has to pay more for content, this is one lever pay more for content. this is one lever they have to pull. we'll leave it there, kevin. thank you. >> from e-mails to the economy and the race for 2016, took the stage in the first debate last night. more than 15 million americans watched the highlights of what they saw next. and catch a new episode of jay leno's garage tonight here on cnbc at 10:00 p.m.

welcome back. the news keeps coming fast and furious this afternoon. we have breaking news on tesla to get from phil le beau. >> hi, kelly. tesla is rolling out auto pilot technology to the fleet of vehicles. this is technology that the ceo ellon musk has talking about developing. it will be rolled out in an over the air software update to tesla owners tomorrow. the technology includes the ability to keep tesla vehicles in their lane, to control lane changing as well as parallel

parking. this is all part of what musk sees as the future for driving, which will eventually included autonomous drive vehicles. but for now, as he has been proximate issing for several months, tesla has been developing and will be pushing out software technology in vehicles in tesla models out on the road allowing drivers to, in essence, have the vehicle drive itself. now they'll have to stay engaged when they are driving. they have to have the hands on the wheel. it is not as though they can look away and not be engaged but it does allow the vehicle to do many of the functions. we had the chance to test out the auto pilot software here in new york. we'll have much more during "fast money." and tesla rolling out technology long anticipated and now the reaction from the public as this software goes into tesla models over the next couple of days. >> and phil, i would like to look at tesla shares to see if

they are moving on this. what did you think of the experience, as a driver, if we are using that terminology, of it. >> very intuitive. it is a system that when you were driving, you were not concerned you didn't know where the vehicle was going it. was comfortable. a lot like cruise control. and when we've tried other self-driving technology. it is built in in a intuitive fashion, so if you don't have your hands on the wheel, can you do a lane change. if there is a vehicle next to you, it won't let you lane change. there will be more advancements over time. but this is the beginning of what we'll see more and more of, not just from tesla but from other automakers as well. >> we have to go. phil, thank you. and since the shares are not moving after hours, is this not seen as that significant, in your view. >> given that phil was driving down the west side highway, i

could tell you right about where he was from seeing that scene. obviously the technology works. but also i don't know how many have upgraded the phone to the newest apple operating system. these come in wirelessly as phil said. the software updates. because rather than bringing it into a mechanic, you'll get that wirelessly into your tesla. we'll see when joes and janes use it other than mr. le beau. >> we have more "closing bell" in just a moment, everybody. stay tuned. important than your health.

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a big hour here on "closing bell" today. netflix falling on the first earnings miss in eight years. square filing for an ipo even though tough market conditions casting doubt over the other two waiting for in terms of pricing. and now tesla announcing auto pilot. phil le beau told us about that. thank you for the panel for joining us. carl ross, jon najarian. "fast money" coming up in a few seconds with melissa lee. melissa, take your pick. >> and we have all of this. but mcdonald quietly making a new high in today's session so

we're going to trade that stock as well. >> all day breakfast. >> i could eat a egg mcmuffin right now. >> they just have to deliver it. >> "fast money" starts right now. live from nasdaq market overlooking time square. dan, steve, karen and gooi today. the real reason the dow fell more than 150 points it. wasn't just wal-mart. but comments from the ceo of delta. what he said that had traders running for cover. it is all in the egg mcmuffin. the highest point with all day breakfast leading the charge but is it enough to keep investors loving the stock. how long can the golden arches keep their shine? and netflix is tanking in the after hours session, down 6.8%. paired the losses. julia boorstin is live with the details. >> netflix missed the earnings